December 20, 2004

The Sky is Falling!

Throughout the semester, we have been discussing why copyright law today is in such a mess. We've shot down every proposed solution that would radically alter the copyright regime as either unworkable or impractical (musical socialism, anyone?). Here are some of the major copy problems:

The P2P Threat. Every PC is a potential printing press, mastering facility, and recording studio, all rolled into one. Duplication of copyrighted works can be done cheaply and with high fidelity. P2P Internet creates a low-cost mass distribution channel for these copies. And unlike the original Napster, the decentralized nature of most P2P clients today means they will continue to operate even if P2P software companies are shut down.

Copynorms. To the vast majority of P2P users, P2P file sharing of copyrighted works is socially acceptable, even encouraged. This directly conflicts with current copyright laws.

One-sided Legislative Process. Until recently, most copy legislation has been shaped primarily by the content holders. Consumers do not get a chance to sit at the copyright policy table. Not surprisingly, consumers feel these laws are grossly unfair and serve only to maintain the content holders' monopolies and profits. The results of this lopsided process are copyright laws that make no sense:

The DMCA. What happened to our fair use rights?

The Sonny Bono Copyright Term Extension Act. What happened to our public domain works?

The INDUCE Act. Unlike previous legislation, for the first time, consumers had someone sit at the negotiation table whose interests aligned with theirs. The Consumer Electronic Industry pretty much shut down the proposal, for the time being.

The International Problem. Being able to enjoin P2P developers in the U.S. will only cause them to move to safe haven countries, or countries where the IP protection is lacking.

As it stands, either norms change or the law must change. Despite all the doom and gloom the RIAA and MPAA are prophesying, I just don't see it. And I may be going out on a limb here, but the current copy system isn't in complete disarray. It works for the most part. Every now and then new technologies will cause a little chaos but either the system itself or the market will eventually fix the problem. Like a piece of buggy software, applying relatively minor, problem-specific patches to fix the major problems may be all we really need. Here are some fixes that probably need to be made:

Mandatory registration

One of the Free Culture problems results from the lack of mandatory registration of copyrights. Our culture builds upon the past; new, creative works sometimes will require authorization clearance from content owners of older works. Transaction costs of obtaining this clearance are increased unnecessarily because IP rights are transferable and without a central registry, content creators have a difficult time finding the current rights holders. Mandatory registration will also help creators determine if a work is already in the public domain (so they can go ahead and use it without needing permission).

A central registry will hopefully be of some assistance to judges, court clerks, and third parties like ISPs in determining whether to issue/comply with those nasty DMCA subpoenas. Finding the current owner of a work can also be problematic due to copy protection lasting well after an author dies, which brings us to the next problem.

Create shorter but renewable copyright terms

Stop all this retroactive term extension nonsense. If Disney wants to keep Mickey in their dungeons for eternity, that's fine, but don't lock up our public domain works in there as well. Most works have little commercial value after their initial run, which seems to be 3-5 years after inception. This could be the basis for setting each term length. The Copyright Office can do a study and set this figure (and change it as the situation requires). Once the term is up, most works should fall into the public domain since the owners would have little incentive to pay a renewal fee if their works have little revenue-generating value. For the few works that remain commercially viable, those can be continually renewed. Mr. Hand suggests the Copyright Office handle the registry and renewal fees- that works for me: Patent Office handles patent registrations, Copyright Office handles copyright registrations.

Get rid of the DMCA, or explicitly give us a fair use right in DRM'ed works

The major premise of the DMCA was that every PC creates an authorized copy in its temporary memory; this is ridiculous. Circumvention of copy protection schemes is prohibited, no matter the reason or purpose. The DMCA has withstood constitutional challenges; at least one court has said that it doesn't violate the fair use doctrine because the analog hole still allows consumers to make copies (albeit poor quality copies). There needs to be explicit exceptions to circumvention of copy protection for fair use purposes. This is going to be very important because it looks like most content will soon be locked up in some copy protection scheme and even the analog hole will be plugged up.

Criminal enforcement of copyright violators

No, I'm not really advocating this (at least not yet), but there's nothing like seeing your college dorm buddy handcuffed and incarcerated for a year for sharing some songs. How's that for dramatic effect. Current copynorms are not going to change unless things like this happen. Of course there's the prison overcrowding problem, and using limited federal resources to enforce copy violations when there are more serious crimes out there doesn't make this a realistic option. If copynorms cannot be changed, that means the copy laws must change.

The RIAA and MPAA have decided that civil infringement suits against P2P individuals, coupled with interdiction software that floods the file sharing networks with fake copies will drive users to the legitimate services. And for a short while it seemed to work. But all indications are that while iTunes had grown steadily, P2P traffic remains steady, if not growing in leaps and bounds.

A more balanced copy legislation process

It may be unnecessary for consumers to have representatives sit at the negotiations table, as long as their interests are adequately represented. For this to happen, there needs to be a more balanced approach to the legislation process. Perhaps the Copyright Office needs to take a more active role in conducting market studies and influencing copy policy. Sure, it's important to have the input of the copyright holders, libraries, consumer electronics industry, and others who sit at the negotiations table, those interests shouldn't be the only interests copyright law should be protecting. Any legislation needs to have in mind the overarching principles embedded in the Progress Clause of our Constitution:

To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.

Copy protection should be only given to the extent necessary to induce incentives to create. Too much protection and we hinder creativity because our culture builds on pre-existing works. That's why I don't see the P2P threat as a huge problem, given the current situation. Music consumption has more than tripled with the rise of P2P file sharing networks, netting a huge societal benefit. At the same time, profits of the major record labels has only declined slightly from this "rampant piracy." A lot of this was due to their own stubborness to embrace the new technologies, which is completely understandable given how profitable the current distribution methods were and will continue to be for a long, long time. Record sales account for nearly $7B annually, with online sales of music in digital format accounting for under 8% of this currently. CD sales still dominate, and although digital sales will increase over the next couple of years, CD sales will be the larger chunk of record label profits. Like RCA trying to snuff the FM technology so they can squeeze more out of their monopolistic hold on AM, the content holders seek to shut down any new technologies that threaten their currently profitable distribution channels.

Even if the content holders get the ruling they want from Grokster, the results might not be what they were hoping for. Incongruent worldwide IP protection will make it impossible to shut down P2P. KaZaA has already won in the courts of the Netherlands. The Canadian legislature has recognized a right to make copies for private use, and the Canadian Supreme Court has held that downloading copyrighted works via P2P for personal use is not a violation of copyright laws. Many other countries have little or no IP protection. Developing countries see IP rights as hindering their country's progress.

Thus, shutting down P2P in the U.S., if that's even possible, will only shift operations extraterritorially. But even that's not necessary to keep P2P alive. Shutting down Napster created a slew of decentralized P2P software that will continue to operate even if the developers were to be enjoined. A lot of the P2P software code is also freely available for others to develop their own clients.

The content owners claim that if P2P is not shut down, artists will no longer have an incentive to create, and less new works will be released. But this simply is not true. Minus the few successful artists, the vast majority make very little from their association with the record labels. Artists will continue to create, because the big pay day is not what drives them to create (although it certainly may be a factor).

If, however, the content holders are right and people stop paying for content enmasse because of P2P, then we should consider more drastic measures. But with the current situation, it looks like market forces will fix itself. P2P creates new markets and opportunities for the content owners, but they must be willing to adapt. There were many technologies, novel for their time, that created threats to copyright law and it turned out benefit the content holders more than it hurt them (i.e., the VCR).

Civil enforcement of copy violations and any educational campaigns to change copynorms seems futile. Part of the problem harkens back to having a more balanced legislative approach, but that means nothing if the copy laws and policies that ultimately pass seem unfair or makes no sense to consumers. As Lord Templeman in CBS Songs Ltd. v. Amstrad Consumer Electronics (a Canadian copyright case) put it:

From the point of view of society the present position is lamentable. Millions of breaches of the law must be committed by home copiers every year. Some home copiers may break the law in ignorance, despite the extensive publicity and warning notices on records, tapes and films. Some home copiers may break the law because they estimate that their chances of detection as non-existent. Some home copiers may consider that the entertainment and recording industry already exhibit all the characteristics of an undesirable monopoly, lavish expenses, extravagant earnings and exorbitant profits and that the blank tape is the only restraint on further increases in the price of records. Whatever the reason for home copying, the beat of Sergeant Pepper and the soaring sounds of Miserere from unlawful copies are more powerful than law abiding instincts or twinges of consicence. A law which is treated with such contempt should be amended or repealed.